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Punugu Subbiah Vs. Nukalapati Rami Reddi - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in33Ind.Cas.326
AppellantPunugu Subbiah
RespondentNukalapati Rami Reddi
Cases ReferredNawab Sidhee Nuzur Ally Khan v. Rajah Ojoodhyaram Khan
Excerpt:
transfer of property act (iv of 1882,), section 65(c) - mortgage--adverse possession against mortgagor from before mortgage, effect of--equity of redemption--trespasser, rights of--duty of payment of public charges cast upon mortgagor, if runs with land trespasser, if bound to pay it--sale for arrears of revenue--statutory duty, breach of--trusts act (ii of 1882), us. 88 to 90. - .....owner stands on a different footing.10. the covenant created by the clause is in the nature of a personal covenant. where a benefit is secured or a duty is cast on a person, although it be by virtue of being in possession of real property, the covenant is said to be personal. shepp. touchstone 161. in dewar v. goodman (1909) a.c. 72: 100 l.t. 2 25 , the house of lords laid down that 'a covenant to do an act not in respect of the demised premises but which will protect from forfeiture the estate of the lessee in the demised premises, is not a covenant which runs with the land.' lord loreburn points out that such a covenant 'does not touch and concern the estate' simply because the estate may come to an end, if the covenant is broken. by parity of reasoning the duty cast on the mortgagor.....
Judgment:

1. Mr. Krishnaswami Aiyar argues that no cause of action is disclosed in the plaint. This case has been before the Courts during the last six years and yet this point was not raised hitherto; on that account we examined the pleadings carefully; it appears to us that prima facie the contention of the appellant is well founded. This appeal relates only to items 672A and 674B. The facts stated in the plaint are, that the plaintiff obtained a mortgage in respect of these items and other properties from certain persons who may be described as the Vavilla people. He brought a suit (Original Suit No. 108 of 1806) against the mortgagors. The right of the Vavilla people to mortgage the property was disputed by the 12th defendant, who claimed title from certain persons who may be called the Sarasvati people. The 12th defendant conveyed his rights to one Nalluri Samiah. Nalluri Samiah was made the 19th defendant. Issues 14 and 15 raised the question as to whether the property belonged to the Vavilla or the Sarasvati people. The judgment of the Munsif is not very clear on this point. In effect he seems to have found in favour of the Vavilla people; he gave a decree to the plaintiff. This was confirmed on appeal by the District Judge. While a second appeal to the High Court was pending the revenue payable to Government on the property fell into arrears; and the 2nd defendant in this suit purchased the property at the revenue auction. The plaintiff now seeks to recover the property. His contention is that the 2nd defendant is a benamidar for Nalluri Samiah, the 19th defendant in the first suit, and that, as it was the duty of the said Samiah to have paid the arrears, he must be deemed to have committed a fraud in allowing the property to he sold and in purchasing it in the name of the 2nd defendant for his own benefit. In effect the contention is that the 2nd defendant is a trustee for the plaintiff. It was contended by Mr. Krisnhnasami Aiyar that there is no legal evidence on which the finding as to the 2nd defendant being a name-lender to Samiah can be sustained. The Munsif refers to oral evidence relating to possession and to other circumstances in support of his finding: the lower Appellate Court has confirmed that finding: we are unable to say that there is no legal evidence to support it. But granting that the 2nd defendant is a benamidar for Nalluri Samiah, it has to be proved that Samiah was under any legal obligation to pay the arrears of revenue due upon lands. Prima facie, as we said before, the finding of the District Munsif in the mortgage suit negatives any subsisting right in the Sarasvati people from whom Samiah derived title at the time of the revenue sale. But as the point has been raised for the first time in this Court we think it safe to call for a finding on the question.

2. Whether at the time of the purchase by the 2nd defendant at the revenue sale, the 19th defendant or the Sarasvati people, from whom he claimed, had such a subsisting interest in the property as made it obligatory on them to pay the revenue for non-payment of which the property was sold?' This question does not refer to the initial liability to pay the revenue by virtue of the patta standing in the name of any of the parties, but to the question whether as between the plaintiff, the Vavilla people and the Sarasvati people inter se, who was bound to protect the property from the revenue sale.

3. Both parties may adduce fresh evidence. The finding should be submitted within two months and seven days will be allowed for filing objections.

4. In compliance with the order contained in the above judgment the District Judge of Nellore submitted the following

Finding

5. How the Sarasvati people originally came by the land seems to me still doubtful, but it is perfectly clear that they were in possession and from them Bandepalli Venkatachelam got the land and from him Nalluri Samiah. It may be taken they were trespassers.

6. My finding on the issue sent down to me is that at the time of the purchase by the 2nd defendant at the revenue sale, the 19th defendant or the Sarasvati people had no such subsisting interest in the property as made it obligatory on them to pay the revenue for non-payment of which the property was sold.

7. This second appeal coming on for final hearing on the 16th December 1915, after the return of the finding of the lower Appellate Court upon the issues referred by this Court for trial, and having stood over for consideration till this day, the Court delivered the following

Judgment

8. The facts of the case have been fully stated in our order of remand. The finding in effect is that when the land was sold for arrears of revenue, the 19th defendant, who claimed to hold under the Sarasvati people, was in possession. The District Judge further finds that the Sarasvati people and those who derived title through them were trespassers. It is clear from the documents to which Mr. Ramachandra Aiyar has drawn our attention that, the possession of the Sarasvati people commenced in or about 1882. Consequently at the time of the revenue sale in 1906, the 19th defendant had acquired title to the property by prescription. This title could not affect the right of the plaintiff who obtained his mortgage from the true owners, the Vavilla people, in 1884. As was pointed out in the recent Full Bench decision of this Court in Viyapuri v. Sonamma Boi Ammani 81 Ind. Cas. 412, a person holding a simple mortgage is not deprived of his right to bring the mortgaged property to sale because as against the mortgagor a trespasser has been in possession over the statutory period. The point was not considered in the Full Bench ruling whether the trespasser is not entitled to stand in the shoes of the mortgagor, although the rights of the mortgagee remain unaffected. We are of opinion that the trespasser acquired by prescription the rights of the mortgagor. The 19th defendant, by tacking on the possession of the Sarasvati people, acquired by adverse possession the equity of redemption in the property mortgaged to the plaintiff. The limited right in that equity which the mortgagor possessed, passed to the trespasser. On these facts, Mr. Ramachandra Aiyar contended that the conduct of the 19th defendant, in allowing the property to be sold for arrears of revenue and purchasing it in the name of the 2nd defendant, was fraudulent and that the plaintiff was entitled to recover it. Nawab Sidhee Nuzur Ally Khan v. Rajah Ojoodhyaram Khan 10 M.I.A. 540 : 2. Sar. P.C.J. 198 was relied on for this position. The argument of the learned Vakil presupposes that the 19th defendant was under a duty to pay the public charges under Section 65, Clause (c). The first question, therefore, is whether the duty cast on the mortgagor passes to the acquirer of the equity of redemption by prescription. The point is not free from difficulty and is not covered by authority in this country. Mr. Krishnaswami Aiyar quoted- Renga Srinivasa Chari v. Gnanaprakasa Mudaliar 2 M.L.T. 36. It was held in that case that even a purchaser of the equity of redemption will not be affected by the equities created in favour of the mortgagee. Sadasiva Aiyar and Napier, JJ., in Ramakrishnama Chetty v. Vuvvati Chengu Aiyar 33 Ind. Cas. 321 on the other hand point out that a provision in a Statute which imposes a liability on a person binds his legal representatives and assigns also.

9. The authorities in England (see the cases cited in Smith's Leading Cases, pages 75 to 77) lay down that unless the assignee is named, in most cases, the covenant will not affect him. If we had to decide whether an assignee for value is affected by the covenant mentioned in Section 65, Clause (c), we would have referred the matter to a Full Bench. But the case of a person acquiring title not from but against the owner stands on a different footing.

10. The covenant created by the clause is in the nature of a personal covenant. Where a benefit is secured or a duty is cast on a person, although it be by virtue of being in possession of real property, the covenant is said to be personal. Shepp. Touchstone 161. In Dewar v. Goodman (1909) A.C. 72: 100 L.T. 2 25 , the House of Lords laid down that 'a covenant to do an act not in respect of the demised premises but which will protect from forfeiture the estate of the lessee in the demised premises, is not a covenant which runs with the land.' Lord Loreburn points out that such a covenant 'does not touch and concern the estate' simply because the estate may come to an end, if the covenant is broken. By parity of reasoning the duty cast on the mortgagor to pay the taxes, although its non-payment may result in the estate being sold for arrears of revenue, is not a covenant which touches or concerns the property and as such runs with the land. It is a personal covenant affecting the person in possession under the contract.

11. The decision In re Nisbet and Potts' Contract (1906) 1 Ch. 386 at first sight lends colour to the suggestion that a person coming into possession by virtue of prescription is bound by similar covenants. That was a case of a negative covenant. The Court of Appeal considered that such a covenant was in the nature of a negative easement and that consequently it affected squatters on the land whether they acquired title to it or not. Collins, M.R. says, 'It was admitted that a squatter could not take land freed from an affirmative legal easement; and I understand it to be admitted also that if the right arising out of the restrictive covenant entered into by the former owner of the land was such as Sir George Jessel, M.R., considered it, namely, analogous to a negative easement, then the squatter would take the land subject to the paramount right created by the obligation imposed by the covenant which adhered to the land, and the burden of that covenant would pass to those persons who might become assignees of the land or might acquire in any way a title to the land.' This decision is no authority for holding that a person holding property adversely is bound by all the obligations which rested upon the owner in respect of the property. On the other hand, it was pointed out by Lord Esher in Tichborne v. Weir 67 L.T. 735 that the title of the true owner is not transferred to the adverse owner. 'The Statute does not convey but destroys the right.' Bowen, L.J., quoting Dart's Vendors and Purchasers, was of opinion that the acquirer can in no sense be said to stand in the shoes of the original Owner. The point decided in the case was that a covenant to repair did not bind the person who acquired title by prescription. Brassington v. Llewellyn 27 L.J. Ex. 297 is to the same effect. See also Banning on Limitation, page 84. It is true that the decisions above quoted were given with reference to leases. We see no reason why the same principle should not apply to mortgages. We must, therefore, hold that the 19th defendant by virtue of having acquired the equity of redemption in the mortgaged property was not under a duty to pay the taxes under Section 65, Clause (c), of the Transfer of Property Act.

12. Mr. Ramachandra Aiyar's last contention was that apart from the statutory duty, any person who acquires property by fraud must restore it to the true owner; and he relied on Nawab Sidhee Nuzur Ally Khan v. Rajah Ojoodhyaram Khan 10 M.I.A. 540 : 2. Sar. P.C.J. 198 for this extreme position.

13. It may now be taken as settled that if there is a fiduciary relationship between the parties and one of them has committed a breach of duty, the person injured can compel the person benefited by the breach to restore the property he has acquired. That is really what was laid down in Nawab Sidhee Nuzur Ally Khan v. Rajah Ojoodhyaram Khan 10 M.I.A. 540. We do not agree with Mr. Ramachandra Aiyar that this judgment is authority for the proposition that if anybody acquires property by fraud, whether there is a fiduciary relationship between the parties or not, the true owner can recover possession. Sections 88 to 90 of the Trusts Act show that the duty of restitution is cast only on persons occupying either a fiduciary position or who have a joint interest with the person defrauded. There is no authority for the broad proposition that no title can be acquired, if fraud has been used in its acquisition. We think the right to claim the benefit of a fraudulent advantage should be restricted to persons who are 'under a duty to speak' or under some relationship as above indicated.

14. We must, therefore, hold that the plaintiff is not entitled to recover possession from the 2nd defendant.

15. We must allow the appeal, reverse the decrees of the Courts below and dismiss the suit with costs of the 2nd defendant in this Court. Parties will bear their own costs in the Courts below.


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